Here’s Why You Need to Know FTC Regulations

Over the past few years the FTC has been releasing a series of enforceable guidelines for online advertisers, content producers, and social media users. The guidelines are meant to protect consumers from potential fraud or deceptive practices.

Don’t let ignorance of Federal Trade Commission regulations for social media land you in Internet jail! In this episode of Here’s Why, Eric and Mark explain why you need to be up to date on FTC guidelines for social marketers!

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Full Transcript:

Eric: Mr. Traphagen, you’re being accused of tweeting a link for which you were compensated. Let’s here your side of the story.

Mark: Yes, your Honor, I did tweet the link, but I didn’t know I had to disclose my relationship to the business I was promoting! It was just one tweet and…

Eric: Guilty! Ignorance of the law is no excuse. I sentence you to a lifetime ban from social media. Take him away!

Mark: But I didn’t know! I didn’t mean any harm! Please don’t ban me from Twitter!

Eric: Mark and I recently attended the Marketing Land SocialPro conference in Las Vegas, where we heard Danny Sullivan interview Mary Engle, associate director for advertising practices at the US Federal Trade Commission, or FTC. Mark, why did Danny have an FTC representative at a social media conference?

Mark: Well, Eric, over the past few years the FTC has been releasing a series of enforceable guidelines for online advertisers, content producers, and social media users. The guidelines are meant to protect consumers from potential fraud or deceptive practices.

Eric: What is the FTC concerned about when it comes to social media?

Mark: Social media posts sometimes promote or link to businesses or other commercial interests, or someone may write a review of a business or product in a social post. When that happens, the FTC thinks consumer need to know if there is any possibility that the endorsement, promotion, or opinion might have been influenced by some material relationship with or material compensation from the business concerned.

Eric: What do they mean by “material relationship” or “material compensation”?

Mark: That’s where things start to get a bit murkier. Basically, a material relationship is any relationship where the two parties are in business together, have some sort of partnership, or have even just agreed to mutually help each other out. Material compensation is any form of compensation–money, gifts, free products, free services, etc., that might be enough to influence the receiver.

Eric: So any relationship or compensation that might possibly affect the neutrality of a promotion or review?

Mark: Right. Of course, that’s always going to be a judgment call. Ms. Engle’s of the FTC seemed to suggest that it is wise to air on the side of caution.

She said if it is likely that the consumer might have a different take on your endorsement or review if that consumer knew you worked for the company, or the company was a client, or you got compensated for your post, then there might be a problem.

Eric: So what does the FTC suggest you should do in those cases?

Mark: The main obligation for the social media poster in such situations is to clearly disclose them. In other words, make the relationship you have with the company or product, or the fact that you were compensated for your posting, very clear to your readers.

Eric: How exactly do you do that?

Mark: And there’s where things get a little tricky again, especially in social media. The FTC insists that the disclosure has to accompany each and every posting that might be affected. It must also be clearly visible to and understandable by the consumer. You can see how difficult that might be in a 140-character tweet.

Eric: So did Ms. Engles offer any suggestions on how we should make such disclosure in tweets?

Mark: The FTC hasn’t come out yet with any specific approvals of how to endorse in a tweet yet, but she mentioned that many Twitter users have started using hashtags like hashtag sponsored or hashtag ad to disclose.

Eric: What about employees sharing content from their own company? Does that need to be disclosed as well?

Mark: I asked Ms. Engles that question after her talk, and I think her answer illustrated that these guidelines are still a work in progress for the FTC. They haven’t yet decided how to apply the regulations to every case, nor what kinds of things they will enforce. In this case, she answered at first that you probably didn’t need to disclose if you’re just sharing something like a link to a piece of content on your employer’s site, but after thinking about it out loud for a few more minutes, she reversed herself and said that it probably would be a good idea to make disclosure. In the case of sharing your company’s or client’s content, she said just starting with something like, “Our company published….” or “XYZ Company, one of our clients, has created…” would be good enough.

Eric: Is the FTC actively enforcing these guidelines now? Can I get in trouble if I violate them?

Mark: They are holding off for now on any actions in all but a few very high profile cases where major brands or publications were involved. In most of those cases, the problem was resolved with a simple letter from the FTC alerting the company to the guidelines, followed by a promise from the company to comply in the future. But, the FTC seems to be very serious about these guidelines, and has implied that at some point they will begin to enforce them more broadly. So it’s probably wise to make this part of your social media policy and practice now.

Eric: Thanks, Mark. You can see Mark’s full report on Danny Sullivan’s interview with the FTC representative for Marketing Land at the link on your screen now. In that article Mark gives you a lot more detail about how and when to apply these regulations.

Mark: We hope that you found today’s Here’s Why episode informative and useful. If you did, the best way to say thanks to us is to share it with others, and let them know they can find plenty more Here’s Why videos on our archive page at the link on your screen.

Eric: And please join us again every Monday for a new episode of Here’s Why. Until then, I’m Eric Enge.